PRIIPs: New Regulatory Technical Standards published by the European Commission

Debt capital markets Italy - newsflash

Capital Markets Alert

On 8 March 2017, the European Commission has published a new delegated regulation supplementing Regulation (EU) no. 1286/2014 (the "PRIIPs Regulation"), which set out the regulatory technical standards (the "New RTS") to lay down the Key Information Document ("KID"). Such New RTS replace the regulatory technical standards previously published by the European Commission on 30 June 2016 and rejected by the European Parliament on 14 September 2016.

The New RTS main amendments concern, inter alia:

Multi-option PRIIPs

In particular, the European Commission has clarified that, if the range of investment options includes a UCITS or non-UCITS fund, the relevant PRIIP manufacturer shall partly use the key investor information document (also known as KIID) of such fund to draft the generic KID.

In addition, some information included in the KIID shall be used by the relevant multi-option PRIIP manufacturer to draft the specific KID, relating to the single underlying investment option.

Performance scenarios

The European Commission has set forth that every KID shall lay out a "stress scenario", along with the favourable, moderate and unfavourable scenarios that had already been set out. Such amendment is aiming to provide the investor with a clearer and more complete portrait on the potential future performance of its investment.

Comprehension alert

The disclaimer in the initial section of the KID, relating to the complexity of the product, may be omitted in the case of simply-understandable financial products.

Presentation of administrative costs in relation to biometric components of insurance-based investment products.

In the KID section "What are the risks and what I could get in return", the manufacturer of the insurance PRIIP shall indicate:

The impact of the biometric risk premium on the investment return

The impact of the cost of the biometric risk premium in the "Cost over time" table

The New RTS, except for potential objections of the European Parliament or the Council, will apply from 1 January 2018.